China recently decided to relax the Covid restrictions in the face of public protests. The impact has already been felt in the international oil market. The last six months have seen major ups and downs in the international oil market due to China’s Covid policy.

Oil markets were mixed on Friday as China relaxed its Covid policy, Reuters reported. Such decisions could lead to a recovery in demand in the world’s second-largest economy.

Brent crude oil prices rose 20 cents to $87.08 a barrel on Friday, up 23.23 percent for the day. On the other hand, the price of another fuel oil benchmark US West Texas Intermediate (WTI) crude oil increased by 6 cents to 81.34 dollars per barrel. As a percentage, the price of WTI per barrel increased by 10.07 percent on this day

Both benchmarks were on track for their first weekly gains after three straight weeks of declines.

China is set to announce in the coming days that it will ease its Covid-19 quarantine protocols and reduce mass testing, Reuters reported, citing sources.

IMF Managing Director Kristalina Georgieva said on Friday that a further calibration of China’s Covid strategy will be critical to sustaining and rebalancing the economy’s recovery.

“Oil demand has suffered under tight measures to contain the virus, with oil demand currently at 13 million barrels per day, 1 million barrels below average,” analysts at ANZ Research said in a note.

Meanwhile, European Union governments have agreed to temporarily cap the price of Russian offshore oil at $60 a barrel and an adjustment mechanism to keep it 5 percent below market prices, according to diplomats and a document seen by Reuters.

All US governments must ratify the deal in writing by Friday. However, Poland has not yet confirmed whether it will support the deal.

Oil prices could rise if Russia produces significantly less oil, BofA Global Research said. Even Russian oil production will total 10 million bpd for 2023, while the International Energy Agency has penciled in output at 9.59 million bpd.

(Dhaka Times / 02 December / SAT)